Treasury ‘preparing to step in over budget crisis’

The Treasury has given the power-sharing administration in Belfast a formal warning that it is engaged in preparatory work to take control of its finances, the First Minister has said.

DUP leader Peter Robinson said Chief Secretary to the Treasury Greg Hands has written to Stormont’s Finance Minister Arlene Foster, making clear that an intervention would happen if the current budgetary crisis is not resolved.

Mr Robinson said if the Assembly collapses, it would be “years” before the DUP would be prepared to enter another power-sharing government. He claimed Northern Ireland would therefore come under direct “Tory rule”.

The devolved five-party mandatory coalition has agreed a spending plan that, at present, has a £600 million black hole – in large part down to the failure to implement last year’s Stormont House Agreement.

The agreement between the Executive parties and the British and Irish governments has been held up due to the ongoing impasse over the implementation of welfare reforms in Northern Ireland, due to a Sinn Fein/SDLP veto.

Mr Robinson said Mr Hands’ letter put Mrs Foster on “formal notice” that the Treasury believed the Executive was going to breach its spending control totals and such a scenario would be “unacceptable”.

He said it went on to warn that the Treasury was “starting to take preparatory action to intervene in our financial matters”.

The DUP leader added: “Effectively, that means the Treasury will be taking over decisions about spending in Northern Ireland, and I think if we reach that situation then we are just a matter of probably days away from the collapse of the Assembly when that happened.”

In the event of collapse, fresh Assembly elections would be called. But a new administration would only be formed if the two biggest parties emerging from the poll agree to lead a new Executive together.

Mr Robinson made it clear that the DUP would not come back to work in the same “not fit for purpose” system.

“If we had an election tomorrow we are not going back to anything,” he said.

“The Democratic Unionist Party would not be prepared to form a government having the same circumstances that presently exist. You would be into a very long protracted period of negotiations for a new system of government which was going to operate properly in Northern Ireland and that is the job of years, rather than of months.”

The welfare deadlock has put the rest of the measures contained in the Stormont House deal on hold.

Those include the devolution of corporation tax powers to Belfast, access from the Treasury to £2 billion of additional spending powers, a major civil service redundancy scheme and new institutions to deal with the thorny legacy of the Troubles.

While initially voicing support for the overall Stormont House Agreement, Sinn Fein later withdrew backing for the welfare reform section – claiming proposed Executive-funded top-up schemes for claimants were not as comprehensive as they envisaged.

The SDLP is also opposing the welfare reforms, but Sinn Fein’s position is more crucial, as it has the electoral strength in the Assembly to make or break the Stormont House deal.

Mr Robinson issued a blunt message to his political rivals.

“Sinn Fein and the SDLP are going to have to make up their minds,” he said.

“Do they want to have some control over financial affairs in Northern Ireland or do they want the Conservative Party to control finances in Northern Ireland.

“It is a clear choice for me, I think local input is necessary and helpful. But if they stand back, then all that offers the people of Northern Ireland (is) those on welfare are going to get a worse deal, those who require front-line services are going to get a worse deal, and those who want to have a local input and flavour to the positions that are taken in Northern Ireland are going to effectively end up with Tory rule.”